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Economy in brief: Adaro Energy to reach deal on 2 power plants

Major coal miner Adaro Energy is set to conclude deals for two power plant projects this year worth around US$4.55 billion in total.

Adaro Energy legal director Syah Indra Aman said Tuesday that his company would source syndicated loans to finance a 2x100 megawatt (MW) coal-fired power plant project in South Kalimantan.

Syah said that the project might require $550 million in investment, 75 percent of which would be funded using project financing while the remainder would be funded through equity. The company owns a 65 percent stake in the project while Korean-based energy firm Korea EWP owns the other 35 percent.

“We hope to sign the syndicated loan later this year. A Korean bank will act as the reassurance for the loan,” he said. Syah said that the company would start construction for the project soon after and it would take around 33 months for the construction to conclude.

He also added that his company was on track to reach financial closure for its mega power plant project, the 2x1000 MW Bhimasena Power Indonesia (BPI) in Central Java, which will require $4 billion in investment. BPI is a consortium comprising Adaro, J-Power Electric Power Development Co. Ltd. and Itochu Corp., which won the tender for the project in 2011.

Syah said that land clearance for BPI, better known as the Batang power plant, received a boost after President Joko “Jokowi” Widodo directly involved himself in the project by leading an opening ceremony for the project and giving a one-month deadline to settle the land dispute.

The first stage of commercial operations was initially scheduled for 2016. However, the initial target became unfeasible in mid 2014 after BPI declared force majeure regarding the project as it was unable to acquire the remaining plot of land necessary for the completion of the project. - See more at: http://www.thejakartapost.com/news/2015/11/12/economy-brief-adaro-energy-reach-deal-2-power-plants.html#sthash.taf1TswF.dpuf